The $6 billion deal announced last week between Whiting Petroleum and Kodiak Oil and Gas has fanned expectations that more U.S. energy producers will actively seek deals—the better to capitalize on a surge of shale that is expected to push U.S. production close to 10 million barrels of oil per day.
Yet echoes of bygone mergers, which created the modern day cohort of energy behemoths, linger in the background. More than a decade ago, a flurry of deals gave birth to the "Big Three" oil companies of ExxonMobil, Chevron and ConocoPhillips. Fast forward several years, and all three have been relegated to the sidelines of the U.S. shale boom, where independent firms are rolling in oil, gas and profits.
In fact, a defining characteristic of the domestic energy resurgence is the lack of Big Oil's influence. Years of gorging themselves on pricey mergers have left them unable to challenge smaller players in hot spots like North Dakota, Texas and Pennsylvania, analysts say. Even as U.S. shale companies pursue mergers, energy watches don't expect them to become imitations of Big Oil deals that eventually fell flat.
"Mega-mergers were about rising costs and declining oil prices. It was survival mode," said Fadel Gheit, Oppenheimer's managing director and senior energy analyst, in an interview. "This time around, it's growth focused."
Rather than "a wave" of deals like Exxon's wallet-busting $82 billion deal to purchase Mobil, or Chevron's nearly $40 billion marriage to Texaco, shale deals going forward will be "very company-specific," Gheit said.